The withholding tax reduction included in the new IRS withholding tables will only be felt by Social Security retirees beginning in October, since September benefits have already been processed.
In response to Lusa’s questions, an official source at the Ministry of Labour, Solidarity and Social Security said that “the pensions due for payment in September had already been processed in August and it was not possible to review the new IRS tables.”
Therefore, he adds, “the corrections that arose as a result of the non-application of the new pension table in September will be made up to and including December.”
The new tables include two types of withholding tax rates: one with lower rates (and even 0%) that will apply in September and October and is aimed at compensating for excess tax withheld between January and August, when tax changes had not yet been published, and another set of changes are due to be introduced in November.
Since the Social Security pension payment date is usually the 8th of each month and given the large number of pensioners in the system, the pensions in question begin to be processed in the previous month.
For this reason, pensions paid in September will not yet reflect the new withholding rates.
The ministry, headed by Rosario Palma Ramalho, says that the “new tables” of IRS withholdings will be applied to October pensions and that “in November and December, the new tables provided for in points c) and d) of paragraph 1 of the same order will be applied to October pensions.”
Lusa also asked the Ministry of Labour whether the new withholding tables would already be reflected in the case of pensioners who receive payments through Caixa Geral de Aposentações (which usually pays on the 18th of each month), but did not receive an answer.